Rising interest rates, market volatility, over-optimistic pricing create perfect storm for correction
A brewing storm of politics and economics is set to shake the market for high-end homes in top markets around the country — and the world — in 2019.
After years of strong activity, the lux market is set for a “modest reset,” Miller Samuel CEO Jonathan Miller told Mansion Global.
“It’s not a black hole, it’s the market doing what it should do,” he said.
The more than year-long rut in New York is expected to continue thanks to rising interest rates, stock market volatility, and high inventory that’s giving buyers plenty to choose from.
Los Angeles’ market hit a peak in 2018 — pricing was at its highest, inventory at its lowest, and a number of flashy properties, including spec homes and sprawling estates, hit the market. Many came with eye-popping asking prices, including late media mogul Jerry Perenchio’s Bel Air estate asking $245 million and the $1 billion so-called “Mountain of Beverly Hills” development property.
Sales have slowed though. Prices seemed to have hit a point that are causing buyers to back off. Rising interest rates haven’t helped, either. Brokers widely agree that a correction is coming in the near future.
Miami, meanwhile, seems positioned to fare better than other top markets. Florida has no state income tax, which has always been a draw, but is more so now because of the recent federal tax overhaul that wiped away write-offs available to wealthy people in high-tax states like New York and California.
Still, Miami has a high inventory of high-end homes. In the third quarter, there was 45 months-worth of high-end supply along coastal Miami, according to Mansion Global. [Mansion Global] – Dennis Lynch
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